Botswana introduces Medium-Term Expenditure Framework - CNBC Africa

Botswana introduces Medium-Term Expenditure Framework

Southern Africa

by Trust Matsilele 0

Botswana's short-term forecasts to remain sound, premised on improvement in the diamond industry. PHOTO: Diamond Vault

The Medium-Term Expenditure Framework (MTEF) will also provide a more explicit linkage between the National Development Plan (NDP) priorities and budget allocations by adopting a medium-term budgeting horizon.

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The proposed MTEF is aimed at maintaining expenditure discipline to meet government’s objective of reducing spending to 30 per cent of Gross Domestic Product (GDP) from the current 36 per cent of the GDP.

The plan also intends to help the country in running budget surpluses in order to rebuild government reserves that have fallen significantly in recent years.

To support the commitment to the resource allocations approved under the MTEF, a number of prioritisation, control, and accountability arrangements need to be put in place.

“These arrangements form a key part of the MTEF and are required to increase the legitimacy of expenditure allocations; ensure that once the allocations are decided upon, they can be executed effectively," said the International Monetary Fund.

Some of the arrangements state that the government must demonstrate that it is meeting its previously stated commitments, and if not, state reasons for any deviations.

“Successful MTEFs require credible macro-fiscal forecasts, which inform the setting of aggregate expenditure ceilings. Botswana is strengthening its macro-fiscal forecasting capability.”

A MTFF is a consistent set of fiscal projections underpinned by macroeconomic projections that describe the medium-term path of fiscal aggregates, such as total revenue, expenditure, balance, and debt levels.

These are generally projected at an aggregate level, according to the macroeconomic projections.

(READ MORE: Botswana's 2012 GDP slowed by 4 per cent)

According to the African Economic Outlook report, Botswana’s economic performance improved in 2013, with real GDP growth estimated to have increased to 5.4 per cent from 4.2 per cent in 2012.

The country’s short-term forecasts through to 2015 remain sound, premised on improved prospects in the predominant diamond industry and the economy is set to remain stable due to the proposed MTEF. 

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